TOMA 2: This Time It’s Personal

Just when you thought it was safe to open the curtains, it’s back, it’s bigger, it’s 110% more speculative. This Winter, Leeds United Football Club in association with GFH Capital and some random Yorkshire consortium bring you;

“TOMA 2 – The Adam Pearson Chronicles!”

Less than two months since the last takeover of Leeds United, the BBC claim that the club could change hands again. This time the bidders are said to be a Yorkshire consortium, probably fronted by former Leeds United director Adam Pearson who recently made public his desire to return to football ownership.

Pearson served as Commercial Director during the Ridsdale era before cutting ties with the club in 2001 to purchase Hull City. During his time as Hull City owner/chairman, Pearson led the Tigers from administration in League Two to a much healthier position in the Championship. He eventually sold the club in 2007.

Another six months of speculation and frustration then? Probably not.

The ownership of the club is much more clear-cut this time, mostly because Ken Bates isn’t involved. That’s not to say there won’t be a lengthy due diligence process if this consortium were to bid, but it’s unlikely to drag on as long as the last one did.

GFH Capital made clear they’d be seeking further investment at their first press conference, and, as an investment company, they’ll be prepared and ready to move when any suitable offer comes in.

Fans shouldn’t be surprised that further interest in the club has followed so quickly. Under Ken Bates, Leeds United’s ownership was tied up in so many offshore companies, investors who weren’t put off by his personality will have been reluctant to try and untangle the devious web of lies and Cayman Island companies he’d weaved.

The club’s ownership is much clearer these days while anyone interested in purchasing a stake will be greeted by the much more likeable David Haigh and Salem Patel. Given a choice between those two and Ken Bates, I know who I’d rather deal with.

UPDATE: GFH responded to the speculation with a statement on the official Leeds United site. GFH say they’ve received several offers since taking over the club and are interested in finding new investors, however, they deny any deal has been accepted at this time.

In units you mean company shares, ie 51% giving them a majority share of the company. The consortium aint gonna spend millions on an asset blind, they`ll do checks like any acquisition, like GFH did buying LCH. Hopefully if this rumor does happen it`ll be quicker and easier than before.

How was it phoney? They’re an investment company – they bought a company and are now seeking investment. That’s kinda how it works…

Dr Zen

An alternative reading is that they bought Leeds with no money behind them and are now looking for the money. You know you’d prefer it if we were bought by someone who already had the money to invest. We’ve already tried being owned by a guy unwilling to put a cent of his own money into the team, and replacing him with people unable to invest is only a small step forwards.

Jon Goldhill

Fully agree with you TSS – it seems that everyone is reading too much into this – to me it seems a pretty good business model – buy out Bates and then start pulling in tranches of investment to move forward

Max

There are two questions here, one as to whether the GFH takeover was “phoney” and the second one as to whether that’s what investment company means.

As to the “phoney” takeover, well they evidently did take over Leeds. I think rumours that Bates is still somehow are misplaced. I have considerable doubts as to whether the takeover actually involved £52m changing hands; Duncan Castles is quoting £17m and for all the opprobrium he attracts for being actively sceptical about the takeover, the number feels closer to the mark. Bates had a depreciating asset as long as he didn’t have cash to invest, and had a better chance of a bad season taking us down than a good season taking us up.

GFH’s communications should be taken with a pinch of salt. They came in saying Warnock would get a transfer budget (has he? doesn’t look like it) and that planning was in place for the January window (with the exceptions of maybe Tonge and Hall, it feels like the January window was an anti-climactic mixture of opportunism and desperation – we couldn’t afford to keep Tate, couldn’t afford to buy Thomas, couldn’t afford an alternative to Thomas and the position whereby we were going to buy a backup for Becchio suddenly became one of buying a replacement in what felt like an unforced sale). The latest announcement quotes the “countless” requests for half-season tickets. Countless? Really?

GFH feels a step up from Bates in that the individuals are business professionals and are therefore capable of conducting themselves appropriately in public. Club revenue (albeit constrained by Bates’ forward sales of season tickets) will probably be reinvested. But there isn’t a fund on hand to invest significantly and competitively in the squad.

And this isn’t normally how a private equity company works – they don’t buy something and then sell off tranches to fund progress. They set aside an investment fund (typically part of a larger fund under management) to get the company to the next level – before investing in the company in question. They take a fee for the money under management (much like a bank) and they take a cut on the profits made.

I will grant that football economics are not like those in the real world. It may be the case that GFH have a limited fund which they have had to set aside for the inevitable trading losses they expect based on wages and on the diversion (sell-on, or “factoring”) of the next few years ticket sales. But this isn’t what I would have expected from a normal growth investment company.

Irving56

Precisely.

Irving08

Just to add, as an Investment Trust investor, I would be horrified if on the Trust’s launch, the mangers of my Trusts proceeded to dilute the value of my investment by issuing further shares. As you point out, this is not the way investment vehicles like Trusts work……

Matthew

Please have money, for the love of god whoever buys us, please have money. Invest.
Me no like half empty Elland Road + Warnock football

Maybe I’m reading too much into it, but they don’t say they’ve “rejected” it, they say they haven’t accepted it. There’s nothing to say it isn’t still on the table. Also, they’re very keen to announce they’re seeking investment so I sincerely doubt that statement is an end to TOMA 2.

mrbigwheels

Well spotted…. and, You can be assured ‘snakes and ladders’ is going to be the game to play. Cash flow is at critical levels so something will happen, for sure.

Lufc1979ish

If they’ve untangled bates’ web then surely there’s some Russian billionaire out there who could use standard bog roll for a month instead of those crisp notes and use them to buy us and get us out of this never ending horror show.

Big club, big city, worldwide fan base, what’s to think about?

Exiled White

Hope it’s not a case of here we go again. Need Bates out, Warnock out and and an investor that is willing to put funds into the club and take it forward. Is it really too much to ask?

kev raunds

Agree,someone please sort out this club before we all lose patience MOT

Irving56

Formally the ownership of the club may be clearer but in fact it is no less opaque than under Bates since we have no knowledge of the financial instruments that have enabled GFH to purchase the club. Or, to put it bluntly, whose money are they managing – and under what terms ?

mrbigwheels

If NW ever ‘sings’, (and he says there will be a book), it will definitely be a best seller before anyone even reads it. He is getting ready to leave the building for sure and venture off to the south coast. It is a great shame when… ‘what could have been’… is asked, but…… ‘don’t miss next weeks exciting episode’.

TOMA1, TOMA2, perhaps there will even be a TOMA3, (the sequels will never match the original, surely?), Bates lingers on through his glorious agents, GFHC, Harvey, Williams and a few others…. at the moment. He’s possibly still not received full payment for the sale of this club, still able to extract charges from LUFC income and still in a position to win, win if the PL is ever achieved. I can’t wait for someone to prove that ”Ken Bates isn’t involved”, as TSS puts it, other than the common knowledge that KB is Chairman until the end of the season.

I believe the employees I converse with reference the present input of Mr Bates. I don’t class them as liars, they are not haters or whisperers but are dedicated to what they are involved with and certainly know what is really happening on a day to day basis.

Irving 56 makes a statement below that is really quite accurate and the question ”whose money are they, (GFHC) managing and under what terms?”, really is the primary concern to me also. It’s not going to be revealed of course but could it be that the consortium is KB, Adam Pearson already has an involvement and a few others have joined into the poker game.

The only way this Club was ever going to be sold on from the entangled ownership of Ken Bates, was and is with GFHC being the fresh professional banking face that hopefully every prospective investor can deal with, behave normally and buy into the undeniable potential of LUFC, a third party involvement shielding the despotic demands and attitude of the previous registered owner. A little like having a guest round the family dinner table…. everyone including the children have to behave.

Well done to GFHC on this role alone. Who would ever have thought a Bank would be the only route to move Bates out of the front window, calm the ogre and confine him to the naughty chair in the back room, all be it that he’s still squealing obscenities at a chosen few but hey, look on the bright side… it isn’t at us.

Toma1 is possibly still ongoing may I suggest and Mr Pearson is now revealing himself to us the audience as the the hero of this pantomime getting the paying punters warmed up for… Act Two…. coming very shortly!. This could very easily be Jack and the Beanstalk in glorious bloody sunshinerama.